Photo by Alexander Pöllinger
Volkswagen’s luxury brand, Audi, is currently considering whether to transfer the burden of US import tariffs to consumers through increased pricing, as stated on Tuesday. The company anticipates making a decision this year regarding the potential localization of production in North America.
Audi does not operate any manufacturing facilities in the United States and is particularly vulnerable to import tariffs due to its plant in San Jose Chiapa, Mexico, which produces the widely popular Q5 model and employs over 5,000 individuals.
During the presentation of the brand’s annual results, CEO Gernot Doellner emphasized that the United States represents Audi’s “primary growth market” within the company’s strategic framework.
“This is our objective, and we are committed to it despite the evolving political climate in the USA,” Doellner remarked, alluding to the import tariffs imposed by the US administration under President Donald Trump on goods from Mexico and Canada.
Doellner expressed his expectation for a decision regarding the localization of production in the North American market this year, which may involve utilizing existing Volkswagen facilities as well as establishing a new production site.
Earlier in March, Trump consented to a one-month exemption for automakers from his stringent 25 percent tariffs on Canada and Mexico, provided they adhered to existing free trade regulations. Audi’s Chief Financial Officer, Juergen Rittersberger, indicated that the company was evaluating “the extent to which we may need to transfer at least a portion of the tariffs to our customers through price increases.” He emphasized the objective of identifying a “sweet spot” that balances price hikes with adjustments in production volume, a matter the company intends to investigate further in the upcoming weeks.
The European Union is currently engaged in discussions with the US government to find a resolution regarding what Trump has termed reciprocal tariffs, which could result in additional duties on EU imports into the United States. Rittersberger expressed optimism for a potential agreement between the two parties.
Anticipating modest economic growth, the Audi Group, which encompasses the Bentley, Lamborghini, and Ducati brands, projects an operating margin of 7-9 percent for this year, an increase from 6 percent in 2024.
On Monday, Audi announced plans to cut up to 7,500 jobs as part of an initiative to enhance margins and reduce costs, contributing to a total of nearly 48,000 job reductions planned by the Volkswagen Group by the end of the decade, representing 7.8 percent of its global workforce.
Doellner stated that the restructuring is expected to yield savings exceeding 1 billion euros ($1.1 billion) in the medium term.
